West Penn energy price to soar by 50 percent on June 1

Utility to recover costs from vicious winter starting June 1

HARRISBURG &GT;&GT; The winter that refused to go away is raising its toll on more utility customers.

The Pennsylvania Public Utility Commission is alerting consumers that the price they pay for electricity may jump on June 1.

West Penn Power's price for generated power will surge 50 percent.

Most residents in Franklin County living outside the boroughs of Chambersburg and Mont Alto receive a monthly electric bill from West Penn Power.

About 70 percent of them rely on West Penn to sell them energy and to maintain the power lines. For those customers, a $100 a month electric bill will climb to around $125.

Since deregulation of Pennsylvania's industry in 1996, a person's electric bill has been comprised of two main parts — the cost of generating the energy and the cost of maintaining the wires. Consumers have the option of choosing a power generating company. Many have not chosen a supplier different from the company that maintains the wires, poles and transformers.

"If you have not chosen a competitive supplier, now may be a good time to do so because the price of electricity from the utilities is estimated to increase by as much as 50 percent for some customers," PUC Chairman Robert F. Powelson said. "Before the heat of summer brings increased electric usage, now is the time for customers to again take stock of their electric bills, review their generation rate and shop for a better price or price stability."

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The PUC's alert follows a public shellacking after one of the coldest winters in decades. The PUC got more than 8,500 phone calls from consumers complaining about soaring rates for electricity. Variable rates on some contracts spiked to more than four times the sign-on rate.

Both the PUC and lawmakers have proposed ways to protect consumers in the future. Among the first new regulations approved: A consumer's electric bill will appear as a joint bill with the logos from both the energy generator and the utility that maintains the wires.

More than 3.5 million customers, or about 63 percent, receive their electric generation from their local electric utility, while more than 2.1 million customers are using a competitive electric supplier, according to the PUC.

West Penn Power updates its generation prices for default customers every four months, according to West Penn spokesman Todd Meyers. The rate increase this time reflects high cost West Penn paid for its energy during the winter.

Pennsylvania regulations require West Penn to purchase 10 percent of its power on the spot market, according to Meyers.

Prices on the spot market swing from highs and lows. The polar vortex sent prices skyward.

West Penn has to recoup the high cost for power it bought on the spot market during the winter, according to Meyers.

West Penn buys the remaining 90 percent of its power for default customers through a series of auctions that allows the utility to blends the prices into an average that is less subject to the whims of the market.

"We try to get a fair rate," Meyers said. "It's not always the cheapest. At least it's a reasonable rate."

Even with the dramatic rate hike, West Penn rates remain competitive, according to PUC data on www.PAPowerSwitch.com.

"Historically it's been a low rate." Meyers said.

Prior to the June 1 increase, a West Penn Power default customer paid half his or her bill for energy and the other half for distribution. The energy portion of most utility bills in Pennsylvania has been 60 percent or more, according to the PUC.

Default customers of other utilities are also seeing rate hikes on June 1 — 31 percent for Penn Power, 25 percent for Met-Ed and 20 percent for Penelec. PECO and PPL rates decrease slightly.

The PUC does not regulate the price of generated electricity. It regulates what a utility may charge consumers for improving and maintaining the distribution system.

The PUC has taken an unusual step and created a consumer alert on its website and notified customers of the pending hike in the "price to compare," a per kilowatt-hour charge. The PUC urges caution when shopping for a supplier:

• The utility price to compare is not always a stable price and can vary quarterly. Customers looking for more stability in their electric rates can choose a new supplier offering a longer-term, fixed-rate contract.

• Consumers are advised not to sign a contract without knowing the length of the contract, the price, whether it is fixed or variable, and whether there are any early termination fees.

• The PUC does not control the price of the generation portion of the utility bill. The generation rate is determined by the wholesale electric market and each individual utility.

"While variable rate contracts may be right for some consumers, certain terms and conditions may lead to exorbitant energy bills during times of increased demand," said Sen. Richard Alloway II, R-Chambersburg. "The PUC offers a number of resources to help consumers ensure they are getting the best deal for their household energy needs."